(a) Notwithstanding the terms of any franchise, a franchisor may not withhold its consent to the sale, transfer, or assignment of the franchise by the franchisee to another person unless the franchisor demonstrates in writing to the franchisee within 45 days of receiving the application, or required paperwork, from the potential buyer any of the following:
(1) The proposed purchaser of the franchise has less business experience and training than that normally required by the franchisor of prospective franchisees.
(2) The proposed purchaser of the franchise has less financial resources than that normally required by the franchisor of prospective franchisees.
(3) The proposed purchaser of the franchise does not satisfy the then-current uniformly applied requirements, if any, of the franchisor applicable to prospective franchisees.
(4) The proposed purchaser of the franchise operates a franchise under an agreement with a franchisor other than the franchisor to whom the sale, transfer, or assignment is proposed, if the then-current uniformly applied requirements, if any, of the franchisor precludes prospective franchisees from operating a franchise under an agreement with another franchisor.
(5) The franchisee has not offered in writing to sell, transfer, or assign the franchise to the franchisor on terms and conditions which are the same as those of the sale, transfer, or assignment of the franchise to the proposed purchaser; and the franchisee has not allowed the franchisor at least 30 days in which to either accept or decline the franchisee’s written offer, prior to the sale, transfer, or assignment of the franchise to the proposed purchaser.
(b) Notwithstanding the terms of any franchise, a franchisor may not withhold its consent to the sale, transfer, or assignment of the franchise by the franchisee to another person for the purposes of diminishing the market value of the franchise.
(c) Notwithstanding the terms of any franchise, a franchisor may not withhold its consent to the sale, transfer, or assignment of the franchise by the franchisee to another person because that other person is of foreign origin or is non-English speaking as long as the prospective franchisee is able to adequately communicate with the franchisor and the appropriate federal, state, and local governmental agencies concerning matters of management, operations, environmental compliance, and public safety.
(d) If the franchisor consents to the sale, transfer, or assignment of the franchise to a prospective purchaser, the franchisor may require the franchisee to pay a transfer fee to the franchisor, provided the amount of the fee is reasonable when compared to the sale price of the franchise and provided the fee is not required in an effort to frustrate the proposed sale.
(Amended by Stats. 1999, Ch. 523, Sec. 3. Effective January 1, 2000.)
Last modified: October 25, 2018